Raiffeisen sees $4.5bn Russia ABS sales in '07

Russian banks and other financial institutions could sell at least $4.5bn in asset-backed securities (ABS) next year, raising funds to underpin explosive credit growth, Austria’s Raiffeisen Zentral-bank (RZB) said.

RZB, Russia’s biggest foreign-owned bank via its Raiffeisen International unit, will sell at least $1.5bn of this - $450mn for its own arm and the rest for other clients, said RZB Chief Financial Officer Patrick Butler.

Banks throughout the former Communist bloc, grappling with a widening gap between rapid asset growth and less dynamic deposit growth, are busy seeking ways to raise funds and make room in their balance sheets for more consumer and corporate loans.

“Growth is so fast that we can’t take everything on our own book,” Butler said. “There is more good business out there than we can take on ourselves.”

“It’s a bit of a shot in the dark but I would assume that it will be at least $4.5bn,” Butler said about the volume of ABS sales he expected in 2007

 “But I wouldn’t be surprised either if it was a multiple of this. It’s only a question of organisation because ABSs require such a long lead time.”

“Once you’ve got the factory set up it can go quite quickly,” he said.

RZB itself had five deals in the pipeline, Butler said, including a $450mn ABS bond for Raiffeisen International and four for outside clients.

Butler said he expected the underlying assets in ABS deals to broaden beyond the currently preferred mortgages, car loans and leases to include credit card debt and consumer loans.

“Mortgages are easier to sell because they are more comparable to assets already securitised in the West and because there is some underlying guarantee,” Butler said.

“It’s more difficult to predict consumer loan performance (in the region) because the statistical evidence is just building up.”

Reuters